Ahead of the Curve

The robotics and automation theme has been gaining a lot of attention recently for good reasons. There is an industrial revolution emerging across all industries as they realise that the new tools and applications being developed will be highly disruptive to existing business models. These new technologies cover everything from autonomous cars and delivery drones to surgical tools.

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Member states are placing renewed emphasis on the relaxation of cross-border pension provision as part of their IORP II negotiations with the European Parliament.

A finalised negotiating mandate released on Wednesday by the Council of the EU, which outlines the 28 states’ agreed position on the IORP Directive, said that removing the “remaining prudential barriers” to cross-border provision should be one of the four objectives.

In contrast to a draft negotiating mandate drawn up by the Council in November, member states were less explicit in their support for the proposals on risk-evaluation for pensions (REP) and the Pension Benefit Statement (BPS).

Instead, the mandate only specified that the Directive should focus on good governance and risk management, and should aim to provide “clear and relevant” information to members and beneficiaries.

However, as the Council will base its negotiating position around the most recent compromise draft of the Directive, both elements will remain prominent.

PensionsEurope said it welcomed the Council’s stance and looked forward to engaging with the Parliament.

“PensionsEurope will continue working closely on this topic with the aim to support institutions for occupational pensions provisions in providing adequate, safe and sustainable pensions for the people of Europe.”

James Walsh, the EU policy lead at the UK’s National Association of Pension Funds, said any re-assessment of cross-border regulatory requirements would be welcome by his organisation.

“Unfortunately, the relaxation is not achieved in the current compromise text. It would have been achieved in one of the earlier compromise drafts, but unfortunately things were changed in the later versions.”

He noted that ahead of the revised Directive’s publication last March, speculation was rife that the European Commission would relax cross-border funding requirements.

Instead the initial draft retained wording requiring that cross-border schemes be funded at all times.

Walsh cautioned against placing too much emphasis on negotiating mandates, but said it was nonetheless a “pleasant surprise” to see the wording on cross-border schemes amended.

“I think it’s moderately encouraging that they’ve removed references to the Pension Benefit Statement and risk-evaluation from the negotiating mandate, but we’ve still got to have regard for the actual text of the Directive.”

The negotiating mandate will see the Council engage with Parliament as it begins its revision of the Directive, based around the text initially proposed by Barnier.

Final wording will then be agreed during negotiations between all three EU institutions.

Despite the most recent developments, agreement over the negotiating mandate does not preclude the Commission withdrawing the IORP Directive, as it agrees its 2015 Work Programme.